Bond a is a 2-year 8 coupon bond making semiannual coupon, Ask an Expert

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Bond A is a 2-year, 8% coupon bond making semiannual coupon payments and selling at a price of $964.54 for a YTM of 10%. The duration of the bond is 1.8852 years. Bond B is a 2-year zero coupon bond with same duration (1.8852 years).

–Calculate the price fall if interest rates increase from 10% to 11% for both bonds?

–What happens to duration if YTM goes up to 11%?

–What happens to duration if coupon rate decreases to 5%?

–What happens to duration if maturity is now 4 years?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92714600

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